The saga of the JP Morgan Bank "London Whale" disaster continued last week with the release of a major Senate report and public hearings on Capital Hill.
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During a press briefing Thursday, Levin said the investigation of 90,000 documents, and more than 200 phone conversation and instant messages, showed how the bank "ignored limits on risk taking, dodged oversight and misinformed the public."
But the report also criticized regulators at the Office of the Comptroller of the Currency for not following up on red flags.
From AFP, via Google
Senator Carl Levin, at a hearing on JPMorgan's ill-fated "whale" trades, slammed the bank's trading operation that lost $6.2 billion over just a few months in 2012 as a "runaway train barreling through every risk limit."
"Derivative values that can't be trusted are a serious risk to our financial system," said Levin, the chairman of the Senate subcommittee on investigations.
The incident is a "reminder you just can't rely on a major bank... without a strong regulator looking over," Levin added.
A 300-page report by the subcommittee said that JPMorgan kept adding risky bets on top of earlier ones, hid losses, disregarded its own rules for risk limits, avoided oversight by its regulator and "misinformed" investors, regulators and the public.
Former and current JPMorgan executives testifying at the Senate hearing painted a picture of confusion and disbelief over the scale of the losses, which blindsided the Wall Street powerhouse in the first quarter of last year.
Ina Drew, JPMorgan's chief investment officer at the time with responsibility for the London trading operation which racked up the losses, admitted errors even as she pointed the finger at others.
"I was, and I remain, deeply disappointed and saddened that such significant losses occurred in the business unit I oversaw," said Drew, who resigned last year to take responsibility for the debacle, according to her prepared testimony.
But Drew also pointed a finger at London employees that she said misled her on the scale of the problem and "let me, and the company, down."
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